FirstGroup's New CEO Resists Investor Calls for a Breakup
(Bloomberg) -- FirstGroup Plc’s new chief executive officer rejected the latest investor call for a breakup, saying the operator of British trains and Greyhound buses will focus on improving all of its businesses.
- Matthew Gregory, previously finance chief, took over Tuesday with a message that margins are improving across multiple divisions, as shown by first-half earnings, and that there’s no need for radical surgery.
- The comments on a conference call indicate a shift away from a portfolio review begun by Chairman Wolfhart Hauser, who took charge in May when former CEO Tim O’Toole quit after a full-year loss. The Aberdeen, Scotland-based company had been struggling with underperforming rail routes in the U.K. and intensifying competition at Greyhound from low-cost airlines.
- FirstGroup rejected takeover bids from Apollo Global Management LLC earlier this year, saying they undervalued its business.
- Since then, activist shareholders have been pressing the company to reconsider a breakup, and FirstGroup has attracted renewed interest from buyout firms including CVC Capital Partners, according to people familiar with the matter.
- Gregory said FirstGroup will continue to “run the maths” on “other options,” while adding that its pension deficit is an obstacle to any “significant structural activity.”
- Founder of Coast Capital, James Rasteh, who has been agitating for changes at FirstGroup, said in a statement that O’Toole had “much greater” qualifications when he was appointed but oversaw an almost 75 percent decrease in the company’s share price. Rasteh also claimed Gregory’s previous roles at Rank Group and FirstGroup hadn’t been rewarding for investors.
- The stock rose 10.9 percent to 88.30 pence as of 8:22 a.m. in London, trimming the loss so far this year to about a fifth and giving a market value of 1.1 billion pounds ($1.4 billion).
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- Monday: FirstGroup Investor Calls for Split of U.K. Transport Group
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